Ron Shawgo, writing for the Fort Wayne Journal Gazette, has an article entitled Household income off 10% in state.
Unable to keep up with inflation, Indiana’s median household income has slipped an estimated 10 percent since 2000, with only three other states posting worse declines.
. . .
Indiana’s median household income was an estimated $45,394 last year, lower than the $50,298 earned in 1999, when adjusted for inflation. Only Michigan, Ohio and North Carolina had greater percentage declines. Only eight states showed incomes that outpaced inflation.
How is this happening when American productivity is up (or so I’ve been told?) Is it just that fewer people are pocketing more of the value produced? Or is something else going on? I’m no economist, so this is a real question.
Update
ManFromMiddletown has a diary entry over at Blue Indiana noting some pretty startling information. Indiana apparently has 3 of the 10 poorest communities: Bloomington, Gary, and Muncie. I wonder if student populations figure into the calculations somehow. (I don’t really feel the same concern for a college student living in a hole, eating Ramen as I do a high school dropout trying to raise children living in the same squalor.)
Update #2 Plate o’ shrimp — as I was writing update #1, I noticed that ManFromMiddletown had graced this fair blog with a comment. He points out a report from the Economic Mobility Project (pdf) (put together by folks working for the Brookings Institution and the Pew Charitable Trusts). Page 6 of the report, reveals that for the first 30 years following World War II, productivity increases and median household income growth went up pretty much in lockstep. Since the late 70s, and most dramatically since 2000, productivity has continued gone up much faster than median household income. “[T]he benefits of productivity growth have not been broadly shared in recent years.”
The report itself focuses mainly on intergenerational mobility — the extent to which children move up or down the income spectrum relative to their parents’ generation. (Seems like the “nothing is wrong” crowd will often try to show mobility by pointing out that an individual can expect to increase his or her earnings as he or she gets older.) The report notes the importance of intergenerational mobility to the American Dream. By and large, Americans like to view our society as one where diligence and skill get rewarded. Large differentials in economic outcome are acceptable because, after all, your fate is in your own hands. If you get rich, it’s because you deserve it. If you stay (or get) poor, it’s your own fault. The report suggests three hypothetical types of society – 1) The meritocratic society where you rise or fall according to how hard you work and how talented you are; 2) The “fortune cookie” society where it’s all luck; and 3) The class-stratified society – you’re born into it.
Obviously, we’ve always had a little of all of these going on. But, for the past generation or so, it looks like we’re starting to favor #2 and #3 more than in the past. And, in fact, the study finds that Denmark, Norway, Finland, Canada, Sweden, Germany, and France have more relative mobility than does the United States. In other words, your parents’ status is a better predictor of what your status will be when you grow up than it is in those other countries. In our peer group, only the United Kingdom has similar levels of mobility. Viva la revolucion!
Lots of other sobering information in the report. Thanks ManFromMiddletown.
Given Ohio and Michigan joined Indiana on this list I’d say what we see here are the effects of the massive retrenchment in the big three part of the North American Auto industry. It is by no means over.
Because the American Dream is being killed.
Look at page 6 of the linked document.
There’s been a growing disconnect between growth in wages and growth in productivity.
So there’s a redistribution of income where workers are growing the economy, but receiving less of the benefits.
See this report.
The share of national income formed by wages is at a record low, and in the past five years while wages have grown at a 1.5% annual rate, corporate profits have grown at a 12.8% annual rate.
It’s a massive redistribution of national income from those who live by work to those who live by wealth.
Ah, but just wait until the undeniable economic benefits of Daylight Saving Time kick in!
Parker-
Ah, DST, you mean we will become ever more like Michigan and Ohio which have been “enjoying” DST for many years?
Regarding the report that the ManfromMiddletown cites to, the fact cited that “more” (or more properly, a larger percentage) of national income is going to corporate profits than before doesn’t necessarily equate with the contention that more wealth is ending up in the hands of “those who live by wealth”, while that is possible. To an increasing degree corporations are owned by not-for-profit endowments, pension plans and even foreign governments (“sovereign funds”). The recent retreat by the Democratic controlled Congress from imposing tax changes on hedge funds brought ought a (quiet) chorus of protest from the (first two) interest groups which are usually Democratic oriented pressure groups.
These results, at least with Muncie & Bloomington, have to be skewed because they are relatively small cities with populations of 65,000+ (the article’s minimum population for “poorest” cities) but also very large student populations making up a high percentage of the total population. In a brief Google search I found this (older) article examining this same question:
http://www.rtis.com/reg/bcs/pol/touchstone/April96/poverty.htm
At the very least, Bloomington & I think Muncie are routinely rated very nice places to live…speaking from personal experience Bloomington certainly was/is. Gary, sorry, maybe not so much…
I do have to wonder about Bloomington being one of the poorest communities, less so Muncie, which has lost industries in recent years and is less a “university town” (I think, anyway) than Bloomington.
Bloomington definitely appears to be prosperous if you look at the prosperous group, but it too, has lost industry. The student populations of both Bloomington and Muncie must be skewing the figures at least a little bit.
I suspect the that Bloomington’s grad students and recent graduates who are just hanging around drive up the figure for Bloomington. I think that is why you see College Station, Texas on that national list too. However, I think those cities would still have to have a fairly high poverty rate even without all the grad student influence. The university is becoming about the only game in town with all the manufacturing shutdowns.
I would have to agree with Pila’s comments about Muncie, with the loss of the Chevrolet Plant, Delco Battery, Westinghouse, and with the last remaining Borg Warner plant in Muncie slated to close in 2009, Muncie has had a really rough time. One of my first cousins has worked at Borg Warner since June of ’79. He is in the process of planning for that eventuality, he will be within months of having his 30 years in (depending on when the plant is officially closed), but is far too young to retire. He is a year younger than me, which makes him 48 how, so he’ll be 50 when the plant closes. His dad worked at Borg Warner (more commonly known as Warner Gear), sad for Muncie but by no means isolated. Back in its heyday, there were 3 Warner Gear plants in Muncie. He regrets not getting a college degree and may go back to school. Still, it’s scary for him and his family, he has one daughter at Ball State (in her final year) and a son just starting his second year. His wife teaches school so they do have her income but a tough time for a lot of folks in Muncie.
Bloomington & Muncie each have census populations around 70,000. From all that I’ve seen, those figures include IU & Ball State students, numbering around 35,000 & 20,000 respectively. Bloomington, like Muncie, has lost a number of factory-type employers, but I just can’t fathom they both are in the top 10 “poorest” cities if you exclude the respective student populations, graduate & undergrad. As the saying goes, there are lies, damn lies, & statistics…Perhaps a better gauge of “poorest”-ness would be median FAMILY income, not median income generally or the percentage of persons who report earning less than the poverty level, which likely would exclude most students. On that score, Bloomington does slightly better than Indianapolis, about $54,000 to $53,000 in 2006 according to Money Magazine. Muncie isn’t as good, at about $39,000, but that is equivalent to Cincinnati’s. I just don’t trust this list, in case you couldn’t guess…
Responding to the concerns raised that the poverty numbers given are skewed by the presence of students, wouldn’t that also indicate that West Lafayette should be on this list? After all West Lafayette has a far higher concentration of students as a percentage of the population than either Muncie or Bloomington.
Having lived in both Muncie and West Lafayette, I can say that there’s a qualatitive difference between the two cities. Even in the worst neighborhoods in Lafayette you will not find the level of absolute poverty that you find in most of Muncie (everywhere but the northwest side.)
On the east side of Muncie in Whitely, there a still homes with neither indoor plumbing, nor electricity.
One interesting way to look at this would be by Census tract, and exclude near the campus.
I don’t think West Lafayette by itself has a big enough population for that survey. I think it’s just shy of 30,000.
Interesting discussion, as per usual. :)
Glenn, you make an excellent point. I only read the Yahoo! story and didn’t go to the census website. I wonder if the Census people could do or have done a similar survey that either excludes college students or takes that population into account before making the rankings of poorest communities.
ManfromMiddletown: I have little doubt about Muncie’s inclusion on the list, given the reasons you and unioncitynative cited. Students may skew the rankings a little for Muncie, but probably not every much. Bloomington *appears* to be fairly prosperous when compared to Muncie, however. I do wonder how much its inclusion on the list is based upon the large student population.
Having done part of my medical training in Bloomington, Indy, and Muncie, I recall a much more prominent crack cocaine problem in Muncie than in Bloomington. Also as stated above there just aren’t the same grim, horribly impoverished areas in Bloomington that there are in Muncie.
Yeah, but you’ve gotta admit that there is better pizza in Muncie.
Amen to that Doug, every time I go to Muncie to visit I’ve got to have a Pizza King pizza. My sister lives near Pendleton and when I go to visit her, we always have to get a Pizza King pizza. I think our family must be Pizza King groupies. That brings back memories of college days at Ball State, great pizza to wash down a cold beer with.
Pizza King is definitely my pizza of choice as well — but only if it’s made in the eastern half of the state. I think the franchises are divided so that the western half gets its supplies from a different company than the eastern half. Western Indiana Pizza Kings are not nearly as good.
Around Lafayette, I’ve come to love close seconds like Arni’s and Monicals.
Don’t know that I’ve ever had an Eastern Pizza King pizza, but I can vouch for the Avon Pizza King being pretty good…however, I still would prefer Mother Bear’s or Cafe Pizzaria in Bloomington!
My sister missed out on going to Pizza King on her last visit from Cali. Poor thing.